Question

Subject: Intro to entrepreneurship

Having an understanding of basic business legalities, discuss the legalities involved in forming your new business and the different legal requirements for your business. Use your business idea and research based evidences to answer this question. 8marks

Answer 1

Here are a few important points you should bear in mind before jumping ship from your job and headlong into the business world.

• Proper market analysis - Ften, at the start, a business idea seems brilliant but does not turn into a viable undertaking. You need to do adequate research to understand your company's potential market. Does the good or service you are looking for to sell really need to? How many customers do you need to sustain your business in one month? What sort of customer base do you need to be competitive in 2 years ' time? Are there already similar businesses in the country? If so, then what do they do? If it does not, then why not? These and many such questions will help you assess the market and help you get your business idea feasible.
• Draw up a business plan - Businessmen who are looking to build the business with their own money often forget the importance of a business plan. You should have a solid business plan, even if your venture is bootstrapped and will not need funding. In general, a business plan would cover what you need to invest, to start with, what you need to spend on a month-to - month or quarter-to-quarter basis, and how long you will make the money. Your first business plan doesn't have to be very detailed, but, to start at least, you should have something.
• Enterprise licenses - To start a business legally you would possibly need a business license. Start by calling the Government of your local city. See if you need a license, and if there are any zoning rules you need to know. Check the Small Business Administration website for federal and state licenses, and follow the links that are specific to your company.
• Act upholding fair labor standards - This act sets minimum federal wage, overtime laws, prohibitions on child labor and provisions for record keeping. You 're going to want to read through it and make sure you abide by the existing guidelines.
• Federal equal rights regulations
  This set of laws bans discrimination on the basis of race , colour, religion , sex or national origin. It also includes equal pay for men and women, and it protects disabled people.
• Employee compensation
  Most states allow workers to buy an insurance policy which will reimburse employees if they get injured or become sick from exposure to the workplace. Visit the Department of Labor website to learn more about your duty as an employer and what an employee is entitled to.
• Obtain an Employer ID number
  You'll need an Employer ID number to file your company taxes. To get your number, visit the IRS website and you will get the number directly after you fill out the requisite online forms.
• Know what taxes you need to pay
  Whether your business has one or 100 employees, Uncle Sam says you have to pay some of the taxes. Take the time to study the provisions of federal tax , social security , medicare and federal unemployment tax. The IRS has a breakdown as a proprietor with the tax obligations. You'll probably want to negotiate these commitments with an accountant, and work out a schedule.
  In You'll also also have to pay state taxes, in addition to federal taxes.
• Hiring people
  This affects your taxes as you decide to put on an employee. Once it comes to taxes, the amount of time an employee works with you will make a difference, so study the difference between a W-2 employee and a 1099 employee before making any hiring decisions.
• Acte CAN-SPAM
  Knew there's an email rule there? That is real. Business emails are governed by CAN-SPAM Act. The law requires honesty and the prohibition of tricky subject lines. You must also inform recipients where you are located and send them an simple way to opt out of email messages.
• Collecting Income Tax
  Brick and mortar storefront owners charge a sales tax that is required in that particular area but what if you have an online business? When your company has a physical presence in a state, such as a store, office, or warehouse, you have to pay applicable state and local sales tax, according to the FTC.
• Protection of data
  If your business is collecting sensitive personal information from its customers, a sound security plan must be in place. Besides keeping the data under lock and key, you can collect only the information you need, nothing more. The FTC has a guide to help the companies put in place a plan.
• Bankruptcy
  Though we hope you never have to go here, new companies in some cases hit financial roadblocks. When your company has cash flow issues and considers the prospect of bankruptcy, you'll want to familiarize yourself with some laws before filing the paperwork. The Small Business Association has the resources that you need to look into. Researching company laws can be a boring job but being knowledgeable is always best. While the above list covers a lot of legal ground, there may be additional laws that apply to your business. Find an experienced attorney to protect yourself, and talk about laws specific to your business.
• Entity Formation
  What agency and business model you will follow for your company is an incredibly important decision for you to consider. Some common entities are, among others, sole proprietorship, limited liability partnership ( LLP), and private limited company.